vsraj (administration) (136 Points)
09 September 2019There is a capital Gain of Rs.85 lakhs for an individual (Assessment year 2020-21 (Fin year 2019-20).on sale of house property. Can he buy a Flat costing Rs.60 lakhs and also invest the balance Rs. 25 lakhs in the designated Bonds (Rural Electrification Bond) and avoid capital Gain Tax. My specific question is - whether one can combine the option of buying a new Flat/House and also invest in the stipulated Bonds to avoid Capital Gains Tax ?
sabyasachi mukherjee
(27368 Points)
Replied 09 September 2019
Madhavi Pandit
(78 Points)
Replied 09 September 2019
Yes.a tax payer can avail of the exemption under Section 54 and Section 54EC together
Kapadia Pravin
(17259 Points)
Replied 10 September 2019
Ankit Agarwal
(2 Points)
Replied 10 September 2019
sabyasachi mukherjee
(27368 Points)
Replied 10 September 2019
vsraj
(administration)
(136 Points)
Replied 10 September 2019
Thank you All (Sirs/Madam) for the response to the query raised. I understand that the Capital Gain can be utilised for purchase of more than one Flat/House (ie 2) and also invest in the designated (govt approved) Deposits, to obviate paying Capital Gain Tax.
Also I believe that the Stamp duty/ Registration charges incurred and Broker,'s commission paid while purchasing the property can also be included in the cost of the property purchased..
thank you
vsraj
(administration)
(136 Points)
Replied 10 September 2019
As long as CII for 19-20 is not yet notified we have to proceed with the prev years CII, which at present is 280 (base 2001 is 100)
Kapadia Pravin
(17259 Points)
Replied 10 September 2019
sabyasachi mukherjee
(27368 Points)
Replied 10 September 2019
Kapadia Pravin
(17259 Points)
Replied 11 September 2019
Suresh Thiyagarajan
(Student)
(3986 Points)
Replied 11 September 2019
1. Sale of house property and purchase of another house property will be covered u/s 54 exemption and the amount of investment in new house property can be claimed as an exemption.
2. In your case Rs. 60 lakhs can be invested in the new house and claim exemption u/s 54. And the balance Rs. 25 lakhs can be invested in REC bonds within 6 months from the date of sale.
3. As per Deepa S Bheda, Mumbai vs Department Of Income Tax (ITAT, Mumbai dated March 23, 2010) it is decided that once conditions specified under one section got satisfied there is no restriction why the two exemption provision can be utilized in the same year. Hence there is no restriction to claim sec 54 and sec 54EC exemptions in the same year provided conditions specified in the respective sections got satisfied.
4. With respect to CII it is yet to be notified by the CBDT and for a time being take an appropriate indexation number and arrive at your Capital Gains.
Please correct me if the above solution has an alternative view.
Master GSTR-9 and 9C with India's First Unique Live Course with Live practical training
CAclubindia
